Banks are underperforming during the stock market's coronavirus recovery
- Felix Salmon, author of Axios Markets
The S&P 500 hit a curious milestone earlier this month: Less than 10% of its market capitalization was made up of financial services companies. That ratio was as high as 22% in 2007, before the 2008 financial crisis.
Why it matters: This is not a financial crisis. America's banks are well capitalized, the Fed has restored liquidity to the markets, and trust in the financial sector is hitting new highs. Still, banks are severely underperforming the stock-market recovery.
The financial companies in the S&P 500 include all the major banks, as well as other giant companies like Berkshire Hathaway, BlackRock, and American Express.
- Together, they're worth some $2.4 trillion — but that's only 10% of the $24 trillion market cap of the S&P 500 as a whole.
By the numbers: An update to Edelman's trust barometer shows 65% of Americans saying that they trust their country's banks. That's up from 54% at the end of last year and 42% at the end of 2012.
Go deeper: Big banks trade profits for coronavirus insurance